Increasing the Implementation of Climate Change Projects

1. Increasing the Implementation of Climate Change Projects Exploring Perceived and Real Barriers in the PFMA / MFMA

2. Providing the context: who, what, how and when?

3. Structure of the Project “MFMA/ PFMA” “Finance Framework” “Practice Notes” Understand perceived and real barriers Identify best practice finance models and funding Sharing guidelines to help officials access funding Officials use to build business cases Six Ball Model Gap Analysis Matrix Opportunity Assessment Attractive Robust Pragmatic Aspiration

4. Stakeholders’ Relationships Municipalities WCG:EADP Misuka Subject Experts Province TAU Communities / Business

5. Timelines and Deliverables Practice Notes May 2013 Insight MFMA / PFMA Report March 2013 Financing Framework Report April 2013 Knowledge Creation In-depth Interviews: March 2013 Domestic & International Case Study Review : April 2013 Data Collection

6. Unpacking the methodology: Research DESIGN AND tools

7. Structured Selection of Case Studies Energy Management Solar Water Heaters Renewables Waste- Energy Water Energy Efficiency Metro Non- Metro Small Scale District Medium Scale Large Scale

8. A Systems Perspective Commerce Process Ecology Culture Technology Local Government Regulation Suppliers & Contracts Communities Governance Infrastructure Politics Structures Finance

9. The Six Ball Model Policy: Design principles informing the nature and functions of an entity Policy Strategy Legislation Process : Institutionalised procedures guiding the allocation, disbursement & application of resources Culture: Accepted values, norms, and beliefs guiding behaviour Culture Process Infrastructure (Tangible Capital) Networks & Organisation (Intangible Capital) Human Capital Infrastructure: Physical assets controlled by a municipality ranging from IT systems to smart meters Networks: Structure of an entity and the patterns of interaction between departments with an entity and third parties Human Capital :Quality of skills and HR interventions that promote the development and retention of skills Strategic Asset Foundation Assets Tactical Assets

10. Sharing initial FINDINGS: IMPORTANCE OF Institutional barriers

11. Onerous • PPP is expensive and time consuming • No lifecycle costing • Short time horizon of financial and budgeting processes • SCM : Selection of established technologies • SCM: Difficult to identify qualified suppliers • SCM designed to support large-scale engineering projects • No incentive for branches to create ‘operational savings” • Performance management system rewards compliance • Income and finance model ignore potential savings. • Complicated electricity tariff structures • Poor communication of electricity tariffs • No fiscal strategy • MFMA: Section 78 • MFMA: Section 33 • Weak national electricity and water regulation increases • NERSA regulation is ambiguous • MFMA: Criminalisation of wasteful and fruitless expenditure. • MFMA: Easy to appeal the award of tenders which stalls implementation. • No green procurement policy at the national and local government level. • Risk averse • Regulation interpreted in the most narrow and strict sense, especially by Legal, Finance, SCM • Limited teamwork • Short-termism and insular • Myth: reduction in electricity sales will harm the financial health of municipalities . • Myth that expenditure outside 4A/4B is disallowed ( e.g., no mandate to spend on environment). • Leadership prioritised the delivery of basic services , and climate change projects seen as a ‘nice to have’ • Myth that municipality must purchase cheapest electricity which thereby excluding RE Policy Process Culture Infrastructure Organisation Human Resources • Limited skills to • manage the fiscus strategically • create a financial strategy • Take calculated risks • Prioritise expenditure decisions using multi-criteria weighting models. • Capital injection requirement from potential investors • Engineers have disproportionate control • Complicated intergovernmental structures / governance mechanisms. • CFO, branches and Treasury apply a different interpretation of legislation • Poor access to data

12. Summary of Findings Policy Strategy Legislation Culture Process Infrastructure (Tangible Capital) Networks & Organisation (Intangible Capital) Human Capital Difficulties , but not insurmountable Severely limits projects Problematic

13. Emerging Lessons: Interpretation Officials adopt the most conservative interpretation of regulation and legislation Need to develop a culture of taking calculated risks, which is supported by processes Reduce tension between being compliant and being innovative Combine a ‘compliance mindset’ with a ‘business-opportunity mindset’ Return Rf Risk

14. Total value Flexibility Creating options that allows the municipality to respond better to shocks Emerging lessons: Valuation Savings Income generated by reducing an expense that would have been incurred Revenue Traditional accounting cash flow calculation

15. Technologies Delivery & Communities SCM, PPP, IDP & SDBIPS Green Projects Intergovernmental Relations Legislation, Strategy & Policy Culture , Rewards & Value Relationship business & Funders Cash flow, Revenue & Expenditure Emerging lesson: Integration